What is Accelerator Oscillator?
The AC (Accelerator Indicator) is a leading indicator that is found on most forex charting software, with the MT4 platform taking the lead role. It is used by technical traders to predict changes in trends via the use of moving averages and is one of Bill Williams Indicators. It applies moving averages in its ability to predict changes in forex trends; it can clearly aid investors in knowing when the market is changing from a bullish to a bearish one of vice versa.
The Accelerator Oscillator was formed of the Awesome Oscillator. The major standing difference is the presence of its 5-period Moving Average on the AO. This evidently implies that a change in the acceleration of the Awesome Oscillator would mean a possible reversal before the AO catches in on them.
Trading the Accelerator Oscillator
There are lots of key styles to employ when trading the Accelerator Oscillator. The basic style is that which uses the zero-line as a yardstick for trade alerts. What this means is this, when the AO moves below the zero line along is suggested, and when it moves from on top a short is in place. I have seen how weak these signals tend to be, and I’ll advise that traders stay away from trading this technical indicator as they are extremely unreliable.
The Accelerator Oscillator is a very good technical tool that can be used to confirm the Awesome Oscillator as the Saucer entry. The Saucer entry is formed when the AO bars changes color from Red to Green when above the Zero line (or the opposite for a sell). A confirmation signal from an AC indicator in a case where an investor is faced with a Saucer entry would boost the success rate and enhance profitability.
Using AC as an exit strategy from alerts gotten from the Awesome Oscillator. This mainly due to the fact that Accelerator Oscillator sees a trend quicker than the Awesome Oscillator and also it can trigger an exit signal for an open position before the Awesome Oscillator.
Awesome Oscillator = SMA (Median Price, 5 Periods) -SMA (Median Price, 34 Periods) Accelerator Oscillator = Awesome Oscillator – SMA (Awesome Oscillator, 5-Periods)